Earned value management
At Acad Studio, we follow the principle of Earned Value Management (EVM) that helps us to measure the performance of a particular architectural and construction project. It involves a systematic process where there is a constant comparison and analysis of the work planned by the team and the actual work done.
EVM provides a method that permits the project to be measured by the progress achieved. The project manager is then able to forecast a project’s total cost and date of completion based on the EVM analysis. This method relies on a key measure known as the project’s earned value that gives a check on the work done on-site.
Usually, the term “earned value” is defined as the “budgeted cost of worked performed”. This budgeted cost of work performed measure enables the project manager to compute performance indices which in turn provides information on how well the project is doing or performing relative to its original plans. These indices when applied to future work, allow the project manager to forecast with the help of his expertise of how the project will do in the future.
EVM is significant for the company’s work as it aids us to measure and review the schedule-timeline in which we measure how much work has been achieved and also review the cost. This thus helps in project forecasting wherein our projects, EVM serves the quantitative data for decision making and future course of action.
In Acad Studio, we undertake the process of ‘Work Breakdown Structure’ (WBS) which is basically framed to address this purpose only. WBS serves as a baseline for every project against which the schedule, the cost and the performance is measured and noted. This helps us to keep the project under control. WBS in accordance with EVM helps us to analyze the variation occurring in the project after which we provide a corrective action plan to maintain the project timeline and save the incurring cost.
Components of EVM at Acad Studio
There is a certain data with which we work to keep a track of the project work:
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Cost Forecasting - It means that total cost is estimated for the project assuming that no variances will be incurred. This involves cost at every stage of work including the cost of the resources.
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Cost Variances - This involves changes in cost due to some changes that have taken place that ultimately affect the budget. The cost variance could be both positive and negative. If it is positive then the cost is under budget and if negative then the cost is over budget. There is a total cost variance account as well where all cost changes are noted and the reasons for it.
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Performance Indices - This basically means we measure our own performance with respect to schedule and budget cost so as to review the whole work process, the time effort and the final outcome of the project.
Work Management under EVM
The project manager basically deals with three broad questions with regard to the project :
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Where have we been in this project?
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Where are we now in this project?
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Where are we going in this project?
Project manager constantly analyses these three questions while working so that he or she can handle the work progress and keep the work under control. There are three things that are analysed: planned work, actual work and earned value of the physical work.
Planned Work
Planned Value describes the timeline of the project work where the project schedule and cost estimate are noted. Cost and Schedule baseline refers to the physical work scheduled and the approved budget to accomplish the scheduled work. Certain features are taken into account in the planned work :
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Defining the task
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Breaking down the task
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Time-phased schedule work
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Budget scope
Actual Work
Actual Work describes the current progress of the work along with the expenditure that has been incurred. It shows where the money has been spent in the work process.
Earned Value of Physical Work
To report the accomplishments of the project, Earned Value helps to know the figures and calculations in the project. It is the quantification of the “worth” of the work done to date. In other words, Earned Value a person in physical terms, what the project has accomplished.
Benefits of EVM at Acad Studio
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Project Schedule Forecasting
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Improving communication and visibility with stakeholders
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Reducing the risk of variances
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Profitability analysis
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Better accountability
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Performance tracking
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Verifiable Status Reports
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Visibility of the results